New Delhi: The West Asia war has eroded the economic gains from last year's goods and services tax (GST) measures, Dabur's global chief executive Mohit Malhotra told ET in an interview. In this volatile situation, the packaged goods maker is implementing strategic price increases, betting on value growth over volume and pursuing digital-first brand acquisitions, he said."The GST impact was very positive. But inflation now is two, three times of what the GST benefits had offered, because of the war," Malhotra said in his first interview after taking over in the new role last month.In September last year, the government had slashed taxes on dozens of grocery products to a flat 5%, hoping to stimulate demand. "For the past full year, inflation was around 6%; in Q4 (January-March of 2026) it was in the range of 2-3%; it was ebbing. But suddenly, due to the war in the Middle East, from an almost flat 2-3%, it shot up to 10% in April and May," said Malhotra, who oversees business in 120 countries, including the Middle East, Africa, the US, Europe and the SAARC countries, such as Nepal and Sri Lanka, apart from India.Also read | India's monthly household basket may feel the heat of rising fuel costsDabur, which makes Real juice and Vatika shampoo, increased prices by 4% last quarter, as well as reduced grammage across ₹10 and ₹20 packs. HUL, Godrej Consumer Products, Amul, Marico and Pidilite are among the other fast-moving consumer goods companies that have taken up prices in April and May, citing unsustainable increase in costs of crude, packaging material, plastics, glass and other commodities."Currency volatility is adding to the inflation, because the dollar is strengthening the world over-it's impacting all international markets and is a double whammy," Malhotra added. Overseas markets contribute about 26% to Dabur's total annual sales of ₹13,200 crore.Government-run oil marketing companies hiked prices of petrol and diesel last Friday by ₹3 per litre, a move analysts say would have a cascading impact on freight and transportation, impacting almost every sector. Dabur, which reported 15% year-on-year increase in consolidated net profit to ₹369 crore for the January-March '26 quarter, and year-on-year net sales increase of 7% to ₹3,038 crore in quarter, expects to sustain value growth with prices going upwards."We had thought when we were making budgets in January-February, when inflation had subsided, that growth will come from volumes, which is tougher. But now we believe value growth will sustain for about two quarters, as we've been able to sustain because of some advance bookings and buying of commodities. But post that, third quarter, fourth quarter, it could be tough if the war continues," he said.Also read | India becomes largest market for KitKat globally for NestleCautioning on the impact on rural markets, which contribute to half of Dabur's annual sales, he said, "We were very happy that rural growth was kind of seeing resurgence on the back of GST cuts, good crops and further MSP increases."For the quarter ended March 2026, Dabur said rural markets outpaced urban consumption by 350 basis points, though the gap narrowed compared to the previous sequential quarter."If the monsoon is good, maybe it will neutralise the inflation impact to some extent, but we're not sure, as LPG prices have shot up too," Malhotra said. Prices of liquified petroleum gas have surged as much as 60% over the past two months as supplies got disrupted as a result of blockages in imports from West Asia amid Iran war.On mergers and acquisitions (M&As), he said the company is adopting a two-pronged strategy, which it will pursue through its investment platform, Dabur Ventures, with a capital allocation of up to ₹500 crore."We will acquire smaller companies, put seed capital, work with promoters, see how it goes. If they turn out to be profitable, then we consolidate them in our business and buy majority stakes," Malhotra said. "Second, wherever there are gaps in our portfolio, we will acquire bite-sized companies. This adds to our turnover and is strategic for us."Its recent acquisitions include Sesa hair care and natural skin-care brand RAS Beauty. "There are many good D2C brands, but they don't have the bandwidth to scale on their own. They require support, capital and R&D ability. They reach up to, say ₹100 crore, but beyond that it becomes difficult," he said.